Queensland gross feed-in tariff rejected by utilities companies and energy retailers

A gross feed-in tariff for small scale solar PV owners in Queensland has been widely rejected by energy retailers and utilities companies, as well as solar PV owners and the solar industry as a whole. While a gross tariff in Queensland was suggested as part of an issues paper,and was not a recommendation, it attracted widespread outrage from solar stakeholders, with many suggesting that the idea was put forward to protect the revenue of energy retailers and utilities companies. With these stakeholders now rejecting idea of a gross tariff its adoption is now all but impossible and projects that had been placed on hold can now proceed.

As we reported a few weeks ago, the Queensland Competition Authority (QCA) invited comments regarding the possible adoption of a gross feed-in tariff for small scale solar PV customers over the existing net metering arrangement. A review of submissions to the issues paper reveal a wide spread rejection of the gross feed-in tariff, utilities companies and energy retailers citing that the move would risk turning customers against them, as well as being ‘complex, expensive and unfair to owners of rooftop panels’. Some energy retailers went as far as suggesting that tariffs that would encourage homeowners to invest in more battery storage.

The most surprising backer of the ‘no gross tariff’ movement is TRUenergy, a company who have previously come under fire for their support of a reduced Renewable Energy Target. TRUenergy label themselves as a key player in Queensland’s solar industry, raising concerns about the affect on the industry if a gross tariff is implemented but state that their main reason for opposing a move to a gross FIT is ‘customer equity’. The company suggest that a gross feed-in is unfair to solar PV owners as:

“Households that invest in rooftop photovoltaic systems do so in the expectation that they will be able to consume less grid energy, and thereby gain a sense of control over their costs’ and the ‘complexity introduced through the requirement to have metering capable of support a gross FIT… would create significant confusion, and may create the perception that electricity retailers are benefiting at the consumer’s expense.”

TRUenergy propose two alternative options as part of their submission, both which would deal with the issue raised by the QCA that ‘PV customers on a net metered tariff are able to avoid a disproportionate amount of network costs by minimising their reliance on grid-sourced electricity.’ This avoidance of network costs is the main driver for a gross metering situation and, one would assume, be of key interest to energy retailers such as TRUenergy. Instead the company propose investigating a ‘time-of-use’ tariff specifically for solar customers which they claim will ‘provide the right price signals for the investment in PV and will support the objective of trying lower peak demand.’

The real motivation for the time-of-use pricing structure seems to be the recovery of network costs. TRUenergy spend a considerable chuck of their submission laying down their argument for maintaining net metering tariffs with a rate below market value. While energy companies are not yet ready to admit that an 8¢ per kWh net feed-in tariff may be ‘benefitting retailer’s at the consumer expense’, saving their solar PV customers from a gross tariff situation is to be commended. As we mentioned TRUenergy proposed two options, the second is ‘potentially calibrating the fixed network fee component.’

The fixed network fee option would mean that all customers would would be charged for network fees and usage would be charged on top of this, the potential issue with this is how the charge is applied. Generally speaking larger houses with more occupants use more energy, if we remove renewable energy from the equation, these properties pay more network costs as they use more power. Under a fixed network fee energy companies will have to develop a system for calculating a ‘fair’ network cost for their customers, simply dividing the network cost equally between all customers will result if unfair charges levied against homeowners with small, single occupancy homes.

Although the Queensland Government originally saw the gross tariff as a quick fix to the issue of falling utility revenues, it appears that it has stimulated much needed debate on energy charges and the contribution of solar in Queensland. With TRUenergy noting that the cost of PV is coming down so quickly it will soon be a real alternative for most customers unwilling to put up with rising energy prices, it’s a feasible scenario that in the next few years solar PV could be a cheaper alternative to using mains power.

© 2012 Solar Choice Pty Ltd

Rebecca Boyle

Rebecca is a sustainable development and marketing graduate, with a background in community engagement and research. She has a particular interest in sustainable resource use.
Rebecca Boyle